Anti-government supporters attend a rally and memorial for the children killed in recent bomb blasts in Bangkok. Photo: AP

Over centuries the royal kingdom that is now Thailand, which has never been colonised, overcame periods of war, natural disasters and political convulsion.

In 2005, only months after the Boxing Day tsunami killed almost 10,000 people in Thailand, the country’s national elections were hailed as the most fair and corruption-free in its history, a model for south-east Asia’s authoritarian nations.

Anti-government protesters attack a voter near a polling station in Bangkok earlier this year. Photo: Reuters

The economy appears to be heading towards a cliff as politics of hate divide the nation.

Senior military leaders maintain there is no hidden agenda to take over the country in the wake of a disastrous coup in 2006. The country’s frail 86-year-old King Bhumibol Adulyadej has not commented directly on the ongoing upheaval.

Divisive: A government supporter stands next to a picture of former Thai Prime Minister Thaksin Shinawatra. Photo: Reuters

Anand Panyarachun, a two-time former prime minister and elder statesman of Thai politics, points to stark differences between this crisis and others since the country became a constitutional monarchy in 1932. “In the past it was more or less straight forward, two opposing sides fighting on one issue. But this time it is a much more complicated situation,” he says.

“Now there are two, five or six opposing sides – you can never tell. The issues are multifarious and the players are too many.”

“In a normal situation, they protest in the streets for a couple of months and then they start to negotiate. This is something more,” he says.

In broad terms two groups of elite are fighting for power. One is led by Ms Yingluck’s elder brother, ousted former Prime Minister Thaksin Shinawatra who is backed by rural masses. The other is dominated by influential figures in a traditional elite and middle class aligned with conservative royalists.

The struggle comes against a backdrop of deep anxiety over the future of the monarchy when King Bhumibol, the world’s longest ruling head of state, passes away. The monarchy has previously acted as the force that pulled warring parties to the negotiating table.

Pasuk Phongpaichit, an economist and professor at Bangkok’s Chulalongkorn University, says that to understand how Thai politics reached this juncture “you need to understand the drastic changes experienced in Thai society in the past few decades”.

She says Thais today are three times richer than their parents and their aspirations have changed.

“In the past 20 years the many levels of elections that come with decentralisation have also empowered the citizenry, especially people in the provinces,” she wrote in the Bangkok Post.

“They have discovered how the one-man-one-vote system can change their lives for the better, how it has brought more money to their localities.”

But Professor Pasuk said political parties have lagged behind these social changes.

“They still do not adhere to democratic values in their operations and management,” she said.

“They often act like special interest groups which seek political power to benefit themselves.”

Duncan McCargo, a professor of south-east Asian politics at the University of Leeds, says anti-government protesters are failing to grasp that the Shinawatra family is simply the astute beneficiary of seismic changes in Thailand’s political economy.

He says pro-Thaksin parties have locked in the support of a genuine following, especially in the very populous north and north-eastern parts of the country, through populist policies such as health-care programs and village development funds to promote small businesses. These include “urbanised villagers”, many of whom have migrated to Bangkok to work but vote in their home provinces, who account for about a third of the total electorate.

He said the current anti-government protests in Bangkok were the last gasp of Thai dynastic paternalism and they reflected the determination of the old elite and its middle-class allies to check the rising power of the formerly rural electorate by bringing down the Yingluck administration.

Mr Anand, who was nominated in a survey this week as having the most support for the job of prime minister if a neutral person was needed to lead the country out of the crisis (a role he filled after the 1992 political crisis), said it was “obvious that neither side can win” the current conflict. “And neither side is in a position to run the country. No side would be able to function in a full and proper manner because of legal and political restrictions,” he said.

“The intense campaigns mounted by both sides have engendered so much hatred and created, in my view, an unbridgeable gap between the opposing sides.”

Mr Anand told the Bangkok Post that Thailand has bounced back quickly from many setbacks, including the 1997 financial crisis, the 2008 subprime crisis in Europe and the United States and disastrous floods in 2011. But he warned the current upheaval could be a “grievous deterioration” of the national economy.

The country’s financial woes could then result in a lack of action on badly needed political reforms.

The divisions in Thai society have never fully healed from the 2006 coup which removed Thaksin from power and a a subsequent bloody crackdown on pro-Thaksin street protesters in 2010. In recent months there has been a serious deterioration in the security environment.

The crisis has escalated over the past week with a sharp upsurge in shootings and grenade attacks. Army warnings over the danger of civil conflict were reinforced by the emergence of mysterious groups of gunmen aligned to the rival political groupings.

After laying low for months, pro-government "Red Shirts" have become more active. Hardliners announced they would launch a "civil war" in March. They are threatening to target the country’s anti-corruption commission which is pursuing Ms Yingluck over a controversial subsidy scheme for rice farmers. She could be suspended from office by mid-March.

Mr Anand says Ms Yingluck’s government became dysfunctional after it dissolved parliament in December and called new elections, which are now incomplete and disputed. But he says it was not entirely the government’s fault.

“Of course there are political obstacles and economic restraints that have been put in its path,” he says.

Behind-the-scenes attempts to broker talks between the leaders of rival groups this week have so far failed to ease the tension on the streets of Bangkok.

Mr Anand warns time is running out for Thailand. “We cannot afford to have this kind of dysfunctionality continue without any end in sight otherwise we will be courting disaster….we will soon be reaching a tipping point.”